What if everyone took their money out of the big banks and put it in local credit unions?

[garybeck]

The more I think about it, the more I think it would not be so bad if the big banks just went belly up. they deserve it and we need to stop giving them all our tax dollars and just let them die.

as a way to expedite this, what would happen if lots of people just moved all their savings and checking accounts out of the big banks and opened accounts at their local credit union instead? heck, we could move our mortgages too.

[Sarah Ibarruri]

1. I'm with you - I think banks should never have been privately owned -

Or at least they should've been overseen like utilities are.

[terisan]

2. Sounds good to me. The big investment banks are multinationalists-giving them

those massive was crazy and still is. If the money went to the commercial banks and credit unions we would be doing all right.

[garybeck]

3. which do you consider Chase to be?

are they an investment bank or a commercial bank? my mortgage and my credit card have been moved around from company to company and they both happen to be Chase right now.

[terisan]

11. Ah I guess they are both, as are Goldman Sachs & Morgan Stanley which were given commercial

status last September so that they could borrow emergency funds.

I do not know whether they have to keep these entities separate.

[elleng]

4. Not a bad idea, but might not be so easy.

Many might have to SEARCH for those 'local credit unions.'

[Ernesto]

5. I'm a real believer in my credit union.........

Locally accountable, ol' time honest banking.

[Skittles]

6. did it a long time ago

[DeschutesRiver]

7. The credit union system got a billion dollar capital injection in Jan. to cover 2008 losses

This has flown under everyone's radar, and I don't know why - I did find one post here at DU with the WSJ article, but there were no responses. I've included 3 links explaining it a couple of different ways so people can get up to speed and at least question CUs more closely rather than just assume safety for no good reason.

The way I understand the most worrisome element of how the NCUA system works: individual credit unions invest their money with the wholesale credit union system above them, so that their smaller investment dollars can be pooled with every other investing credit union in order to make better profits on it.

And the wholesale CU lost a bundle on its investment forays into MBS and other dicey stuff, so they were given a chunk of bailout money - one article says the money is coming from raised assessments; the other says they are backed by "the full faith and credit of the U.S. Government" which is taxpayer funding. The system was given a one billion dollar capital injection (losses for 2008 were greater than that) and the assets have been guaranteed in the amount of 80 billion.

Which means we don't really know how much more they may sustain in losses, all of which will mess with the balance sheets of those credit unions that you and I belong to - there is no transparency yet, so we don't know how many are affected or how badly they may have been damaged by the some of the same crap that we think we are avoiding by using them instead banks.

There is no one in the financial world that can be trusted right now - I have belonged to a credit union since I was 17 (am 51 now), and no longer will automatically gift it with a "safe haven in a storm" status unless I can be absolutely sure about mine. And given this CU bailout news, how can I ever be sure? I am ticked off - here is the required reading on this (lots more if you google it:

Seeking Alpha blog: http://seekingalpha.com/article/117418-now-it-s-the-credit-unions-turn-to-be-in-trouble

WSJ article link: http://online.wsj.com/article/SB123318420520726249.html

Washington Post link: http://www.washingtonpost.com/wp-dyn/content/article/2009/01/28/AR2009012803242.html

[garybeck]

8. thanks, my idea wasn't so much about finding a safe haven as it is

taking our money away from those who are messing things up and making them go under so we can stop sending them more of our tax dollars.

but you raise an interesting point. where is our money safe? I assume FDIC insured money is safe, regardless of where it is. Agree? I mean, if that's not the case, then it's time to cash out and stash our money under the mattress, isn't it.

[DeschutesRiver]

13. I see where you are coming from and totally agree

I woke up the other day mad as a wet hen, with the same thought, ie, that I wanted a way out from doing any business with these miscreant bankers. Didn't want to support these bad actors even one more day by using their messed up banking system. So I took a good look at my "choices" right now and they leave me seriously underwhelmed.

All I know right now: stocks/mutual funds are not "safe" for me at my age. I believe the DOW will go lower. Looking at a historical chart of it, there is no reason not to expect a lower drop and a sideways movement for some time to come - or let's say, I can't rule that out. If I were to buy $100 in stock now, and the market were to drop another 50%, from 6k to 3k, that is a 50% loss down to $50 - which means at that point I have to see 100% gains (another $50 increase) before I break even. I don't have as much time left on the clock anymore to again scrimp and save to regain those kind of steep losses - we've always been self employed and there is no pension for us, other than what we've set aside over the last 35 years. So I can't park anything in those kinds of investment accounts, not if I need will need it in the short term, which I will.

The other thing I know is that a government will ultimately do whatever it takes for itself to survive. If the FDIC insurance at some point does not pay out on depositor claims, that would make the survival of our government doubtful. If the gov. ever defaulted on treasury bills/bonds/notes, that would make its survival impossible.

With that in mind, I agree with you re FDIC, and at this point, I am not worried yet about either money that is backed by the FDIC, or about money parked in treasuries. Mine is parked in treasuries making zip at the moment. Money I need to pay the bills is still at the FDIC insured bank. And just to be on the safe side in the event of some catastrophic event, I do have a bit under the mattress. While I still believe it is in the government's best interests to make good on the FDIC insurance, I don't think it unreasonable to expect that failures on a large scale with some of those pesky unintended consequences attaching could bog the insurance repayment system down enough that there might in the future be a delay in getting depositors their money.

And note well that the FDIC's own website states the following: "Federal law requires the FDIC to pay the insured deposits "as soon as possible" after an insured bank fails. http://www.fdic.gov/CONSUMERS/CONSUMER/news/cnfall07/questions.html

Don't know about you, but that gives me enough pause for thought that my personal Bank of Sealy has just enough cash under it here to tide me over for absolute necessities like food for and our animals, other basics, etc, in case the FDIC and I don't agree over how soon "as soon as possible" is. The Bank of My Mattress is subject to risk, of theft, fire and moisture, and not insured at all, so I really don't want to put everything I have there unless I see some really bad stuff happening. But even the fact that I have to keep an eye out for happenings that might change my position on that is really disturbing.

Are we all having fun yet figuring out ways to protect ourselves when we don't have all the facts yet? I think not:)

[paulsby]

9. i fricking dig my credit union

imo, it pays to bank locally, and to KNOW your banker.

it is trite, but it's true. i made a habit of going into my local CU (not doing everything by computer, etc.). so, they know me.

i am in the process of purchasing a house, and kept getting quoted crappy rates by all the big banks, etc.

i went into my local CU, talked face to face with the manager and she got me a rate almost a FULL POINT below what the others wanted to charge me.

4.66%

then, after i locked it in (it still had the option to float DOWN), it relocked at 4.62%

my credit union, and the lower rate will save me over 100k over the course of the loan.

[TBF]

10. Moved our savings last month. It's harder to move our checking with

direct deposit, but we're working on that. The idiots my spouse works for fired all their HR people so noone knows how to do things like payroll anymore... :eyes:

[Pakhet]

12. somehow I just don't think

that my $8 matters that much to anyone

[DemReadingDU]

14. When SHTF, what is going to be safe and viable?

Will electronic banking be viable whether at a bank or credit union?

Will employers still be able to electronically deposit paychecks?

Will we still be able to pay bills electronically with auto-pay?


I do just about everything electronically, and it's so time-consuming to change a payment/deposit from one financial institution to another. So I keep procrastinating to change anything.